IDEAS home Printed from https://ideas.repec.org/p/kob/dpaper/dp2026-10.html

Effects of Early Pension Withdrawal on Pre-Retirement Labour Supply: Evidence from Chile during the COVID-19 Pandemic

Author

Listed:
  • Yoshimichi Murakami

    (Research Institute for Economics & Business Administration, Kobe University, JAPAN)

  • Aya Noritake

    (Graduate School of Economics, Kobe University, JAPAN)

Abstract

Although the defined contribution pension system in Chile had not permitted pension withdrawals before retirement age, the Chilean Congress approved laws allowing early withdrawals as an economic support measure in response to the COVID-19 pandemic. This study empirically analysed the effects of mainly the third early pension withdrawal on pre-retirement labour supply using data from a nationally and regionally representative household survey for 2022. To address potential endogeneity from self-selection into pension withdrawals, we applied inverse probability weighting based on propensity score estimation. The results showed that individuals who withdrew their pensions worked longer hours and had a higher probability of employment. These effects were more pronounced among women, while they were statistically insignificant for men. The findings were robust to household-level analysis, which additionally showed that pension savings withdrawn by women were more likely to be used for home repairs. Therefore, the early pension withdrawal, rather than reducing labour supply through the income effect, encouraged female labour supply, possibly due to improved remote-work conditions.

Suggested Citation

  • Yoshimichi Murakami & Aya Noritake, 2026. "Effects of Early Pension Withdrawal on Pre-Retirement Labour Supply: Evidence from Chile during the COVID-19 Pandemic," Discussion Paper Series DP2026-10, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2026-10
    as

    Download full text from publisher

    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2026-10.pdf
    File Function: First version, 2026
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Carlos Madeira, 2024. "The effect of Covid pension withdrawals and the Universal Guaranteed Pension on the income of future retirees in Chile," BIS Working Papers 1176, Bank for International Settlements.
    2. Matias Busso & John DiNardo & Justin McCrary, 2014. "New Evidence on the Finite Sample Properties of Propensity Score Reweighting and Matching Estimators," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 885-897, December.
    3. Byron J. Idrovo-Aguirre & Javier E. Contreras-Reyes, 2021. "Monetary Fiscal Contributions to Households and Pension Fund Withdrawals during the COVID-19 Pandemic: An Approximation of Their Impact on Construction Labor Supply in Chile," Social Sciences, MDPI, vol. 10(11), pages 1-10, November.
    4. López, Fernando & Rosas, Guillermo, 2022. "COVID-19 and attitudes towards early withdrawal of pension funds: The role of trust and political ideology," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    5. Alfredo Schclarek & Mauricio Caggia, 2017. "Household saving and labor informality: the case of Chile," Journal Econom a Chilena (The Chilean Economy), Central Bank of Chile, vol. 20(3), pages 052-080, December.
    6. Miguel Lorca, 2021. "Effects of COVID‐19 early release of pension funds: The case of Chile," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 88(4), pages 903-936, December.
    7. Madeira, Carlos, 2022. "The impact of the Chilean pension withdrawals during the Covid pandemic on the future savings rate," Journal of International Money and Finance, Elsevier, vol. 126(C).
    8. Ridgeway Greg & Kovalchik Stephanie Ann & Griffin Beth Ann & Kabeto Mohammed U., 2015. "Propensity Score Analysis with Survey Weighted Data," Journal of Causal Inference, De Gruyter, vol. 3(2), pages 237-249, September.
    9. Madeira, Carlos, 2024. "The effect of the Covid pension withdrawals and the Universal Guaranteed Pension on the income of the future retirees and its fiscal costs," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(3).
    10. Yoshimichi Murakami & Tomokazu Nomura, 2023. "Decline in values of degrees and recent evolution of wage inequality: Evidence from Chile," Estudios de Economia, University of Chile, Department of Economics, vol. 50(1 Year 20), pages 55-132, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Madeira, Carlos, 2024. "The effect of the Covid pension withdrawals and the Universal Guaranteed Pension on the income of the future retirees and its fiscal costs," Latin American Journal of Central Banking (previously Monetaria), Elsevier, vol. 5(3).
    2. Olivera, Javier & Valderrama, José A., 2022. "The Impact of the COVID-19 Pandemic on the Future Pensions of the Peruvian Pension System," IDB Publications (Working Papers) 12492, Inter-American Development Bank.
    3. Bastías, Jaime & Ruiz, José L., 2025. "COVID-19 pension raids and sovereign risk," International Review of Economics & Finance, Elsevier, vol. 101(C).
    4. Carlos Madeira, 2025. "Indebtedness and labor risk sorting across consumer lender types in Chile," Journal of Banking Regulation, Palgrave Macmillan, vol. 26(2), pages 149-163, June.
    5. Bateman, Hazel & Dobrescu, Loretti I. & Liu, Junhao & Newell, Ben R. & Thorp, Susan, 2023. "Determinants of early-access to retirement savings: Lessons from the COVID-19 pandemic," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).
    6. Izquierdo, Alejandro & Robles, Edgar A. & Tapia Troncoso, Waldo, 2024. "Reshaping Retirement: Navigating Latin America’s Pension Systems after COVID-19," IDB Publications (Books), Inter-American Development Bank, number 13540, August.
    7. Turner, Alex J. & Fichera, Eleonora & Sutton, Matt, 2021. "The effects of in-utero exposure to influenza on mental health and mortality risk throughout the life-course," Economics & Human Biology, Elsevier, vol. 43(C).
    8. Zichen Deng & Maarten Lindeboom, 2021. "Early-life Famine Exposure, Hunger Recall and Later-life Health," Tinbergen Institute Discussion Papers 21-054/V, Tinbergen Institute.
    9. Marco Caliendo & Stefan Tübbicke, 2020. "New evidence on long-term effects of start-up subsidies: matching estimates and their robustness," Empirical Economics, Springer, vol. 59(4), pages 1605-1631, October.
    10. Pedro H. C. Sant'Anna & Xiaojun Song & Qi Xu, 2022. "Covariate distribution balance via propensity scores," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(6), pages 1093-1120, September.
    11. Bodory, Hugo & Huber, Martin, 2018. "The causalweight package for causal inference in R," FSES Working Papers 493, Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland.
    12. Takeshima, Hiroyuki & Hatzenbuehler, Patrick L. & Edeh, Hyacinth O., 2020. "Effects of agricultural mechanization on economies of scope in crop production in Nigeria," Agricultural Systems, Elsevier, vol. 177(C).
    13. Marco Caliendo & Robert Mahlstedt & Gerard J. van den Berg & Johan Vikström, 2023. "Side effects of labor market policies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 339-375, April.
    14. Fitzenberger, Bernd & Seidlitz, Arnim, 2024. "Changing Fertility and Heterogeneous Motherhood Effects: Revisiting the Effects of a Parental Benefits Reform," IZA Discussion Papers 16966, IZA Network @ LISER.
    15. Brucal, Arlan & Javorcik, Beata & Love, Inessa, 2019. "Good for the environment, good for business: Foreign acquisitions and energy intensity," Journal of International Economics, Elsevier, vol. 121(C).
    16. Garbero, Alessandra & Songsermsawas, Tisorn, "undated". "Impact of modern irrigation on household production and welfare outcomes: Evidence from the PASIDP project in Ethiopia," 91st Annual Conference, April 24-26, 2017, Royal Dublin Society, Dublin, Ireland 258641, Agricultural Economics Society.
    17. Jacob A. Jordaan, 2023. "Firm‐level characteristics and the impact of COVID‐19: Examining the effects of foreign ownership and international trade," The World Economy, Wiley Blackwell, vol. 46(7), pages 1967-1998, July.
    18. Stiebale, Joel, 2016. "Cross-border M&As and innovative activity of acquiring and target firms," Journal of International Economics, Elsevier, vol. 99(C), pages 1-15.
    19. Gevrek, Z. Eylem & Seiberlich, Ruben R., 2014. "Semiparametric decomposition of the gender achievement gap: An application for Turkey," Labour Economics, Elsevier, vol. 31(C), pages 27-44.
    20. Guiling Zhao & Yunpeng Fu & Deyu Zhou, 2024. "Study on the Impact of China’s Pension Insurance System on the Savings Rate of Urban Residents Based on the Preventive Saving Perspective," Sustainability, MDPI, vol. 16(21), pages 1-23, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kob:dpaper:dp2026-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University (email available below). General contact details of provider: https://edirc.repec.org/data/rikobjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.